MW Did Elon Musk kill a bill blocking investments in China to help Tesla?
By Chris Matthews
Democrats have accused the Tesla CEO of influencing the government-funding bill to his own benefit
One of the major provisions left out of last week's government-funding bill were new restrictions on Americans' investments in China, with a particular focus on advanced technologies like artificial intelligence, semiconductors and quantum computing.
Democrats' top appropriator in the House, Rep. Rosa DeLauro of Connecticut, has accused Tesla $(TSLA)$ Chief Executive Elon Musk of conniving to have that provision removed to protect his investments in China.
DeLauro cited Musk's "extensive investments in China in key sectors and his personal ties with Chinese Communist Party leadership," and said that "calls into question the real reason for Musk's opposition to the original funding deal."
The news underscores ongoing concerns that Musk and Tesla's major investments in China will act as a corrupting influence on the Trump administration's stance toward the nation, even as Trump campaigned as a China hawk.
"It was not a good signal that legislation negotiated on a bipartisan basis was dropped from the bill, and that one of the largest investors in China seemed to have a hand in that," Jeremy Mark, a China expert at the Atlantic Council's GeoEconomics Center, told MarketWatch.
Neither the Trump transition team nor Musk immediately responded to requests for comment.
It's unclear whether Musk lobbied against the provision, but experts say that pressure on U.S. companies operating in China has been growing and will likely continue to grow given Trump's nomination of China hawks in other key administration posts.
Key players in his White House are to include Rep. Michael Waltz and Sen. Marco Rubio, both Florida Republicans, as national security advisor and secretary of state, respectively. Rep. Elise Stefanik, a New York Republican, will also service as ambassador to the United Nations. All three members of Congress previously collaborated on legislation restricting outbound investment.
"Informed by the national security team's collective legislative background, the Trump administration should craft an outbound screening regime focused on three core issues: expanded sanctions authorities, sector-specific restrictions, and broader prohibitions on publicly traded PRC securities and derivatives," predicted the Atlantic Council's Kit Cotkin, an expert on technology and national security, in a Friday analysis.
Meanwhile, the legislation that was dropped out of the bill would mostly have codified rules already implemented by President Joe Biden's Treasury Department.
The rule, which goes into effect on Jan. 2, would prohibit investing in Chinese entities operating in areas including semiconductors, quantum computing and artificial intelligence.
Any U.S. person wishing to make these investments will have to notify the government, and the Treasury secretary, in consultation with the commerce secretary and other relevant officials, who will decide whether an outbound investment would hinder national security.
This rule and the proposed legislations give the president the ultimate authority on the question of whether to allow an outbound investment, which could make Musk's close relationship with Trump more important than the success or failure of any specific piece of legislation.
Musk's ability to sway decisions over outbound investment to benefit him personally "has to be a worry," the Atlantic Council's Mark said - adding that the first Trump administration's approach to blocking Chinese technological development was "a bit scattershot," and that the U.S. government under Biden has formalized the process.
"The whole process has become much more systematic and comprehensive," he added. "Going forward, the issue is going to be to what extent will will the U.S. government continue along that track, and to what extent will we begin to see the return to haphazard rulemaking and enforcement?"
For their part, Democrats will look to make political hay over Musk's ties to the Trump administration and China.
Rep. Jim McGovern, a Massachusetts Democrat, took to X over the weekend to accuse Musk and Trump of corruption, a line of attack that will likely continue through the next four years.
"President Musk got what he wanted: the ability to sell out the U.S. so he could make money in China," he wrote. "It's all one big game to these guys."
-Chris Matthews
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 23, 2024 12:15 ET (17:15 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments